During yesterday’s Q1 2021 earnings call, following the outstanding financial results, NVIDIA CFO Colette Kress announced that gaming hours played on the GeForce platform were up by 50% following the global COVID-19 lockdown orders, thanks to both more people playing and people playing more time.
GeForce Now, the cloud gaming stream service, also got a mention. According to Kress, 2 million users were added to GeForce Now since its launch in February, and its library of 650+ games is going to grow significantly as 1,500+ titles are currently ‘in line to be onboarded’.
Later in the call, NVIDIA CEO Jensen Huang seemed to want to highlight his fellow executive’s earlier comment as he stressed the conviction that the expanding work-from-home model will favor gaming spend going forward.
I think more and more people are going to work permanently from home. There’s a strong movement of companies that are going to support a larger percentage of people working from home. And when people work from home, it’s going to clearly increase the single best home entertainment, which is gaming. I think gaming is going to represent a much larger segment of the overall entertainment budget of society.
The sentiment is echoed by gaming research firm DFC Intelligence, which released an updated report earlier this week where the analysts point out that even though lockdowns might be lifting or about to lift, at least some of the products and companies are going to see a permanent increase to their consumer base. Additionally, the DFC Intelligence report mentions that customers will see the relative high-value of gaming as entertainment, which should prove resilient even in the face of the upcoming economic recession.
In the past week major public video game companies have reported earnings results that were better than expected. This included Activision Blizzard, Electronic Arts, Ubisoft, Zynga and Nintendo. These higher than anticipated results are the clearest indication we have seen of the impact of stay-at-home orders on consumer spending.
The impact of COVID-19 on the gaming industry is ongoing and will be reassessed on a regular basis. Right now, the biggest beneficiaries are high-end products, hardware, and AAA games. Products that are expected to grow include PC gaming systems, high-end headsets, and subscription services. This could result in long-term growth for these areas as consumers realize the relative value of high-quality game products.
Of course, some of the growth in the video game industry is likely to be short-lived. In addition, some companies are clearly suffering negative impacts from the crisis. As society goes back to normal there will likely be pent-up sending on out-of-home entertainment. However, the good news is that some products and companies are likely to see a permanent increase in their consumer base.
The new report also looks at historic consumer spending trends in the U.S. going back to the Great Depression. The data clearly shows that even when money is tight consumers spend the same relative level of income on entertainment.
Compared with other forms of entertainment such as vacations, location-based entertainment and dining, video games are a relatively low cost and high value product. Furthermore, with stay-at-home orders, gaming remains one of the only available options.
The biggest unknown of the gaming industry is currently related to the release of PlayStation 5 and Xbox Series X. While Sony and Microsoft have both claimed that their respective consoles are still on track to release this Holiday season despite the supply chain problems caused by the pandemic, there is still the chance of one or both systems slipping into 2021. Even if they don’t, the likelihood of units being very limited at launch is high, which would result in lots of wasted demand (anticipated by DFC to be extremely high for next-gen consoles).
AMD and NVIDIA are also expected to launch next-gen PC graphics cards soon, in September according to the latest rumors, though so far there are no signs of those being affected by the same issues faced by PlayStation 5 and Xbox Series X.
The post NVIDIA CEO Says Gaming Will Get Even Larger Due to Expanding Work-from-Home Model by Alessio Palumbo appeared first on Wccftech.